FINANCIAL CHRONICLE™
Dear Reader,

Registration with the Sri Lanka FINANCIAL CHRONICLE™️ would enable you to enjoy an array of other services such as Member Rankings, User Groups, Own Posts & Profile, Exclusive Research, Live Chat Box etc..

All information contained in this forum is subject to Disclaimer Notice published.


Thank You
FINANCIAL CHRONICLE™️
www.srilankachronicle.com


Join the forum, it's quick and easy

FINANCIAL CHRONICLE™
Dear Reader,

Registration with the Sri Lanka FINANCIAL CHRONICLE™️ would enable you to enjoy an array of other services such as Member Rankings, User Groups, Own Posts & Profile, Exclusive Research, Live Chat Box etc..

All information contained in this forum is subject to Disclaimer Notice published.


Thank You
FINANCIAL CHRONICLE™️
www.srilankachronicle.com
FINANCIAL CHRONICLE™
Would you like to react to this message? Create an account in a few clicks or log in to continue.
FINANCIAL CHRONICLE™

Encyclopedia of Latest news, reviews, discussions and analysis of stock market and investment opportunities in Sri Lanka

LISTED COMPANIES

Submit Post


ADVERTISE
Poll

EXCHANGE RATE PREDICTION: 2022

 
 
 
 

View results

ශ්‍රී ලංකා මූල්‍ය වංශකථාව - සිංහල
Submit Post


CONATCT US


Send your suggestions and comments

* - required fields

Read FINANCIAL CHRONICLE™ Disclaimer



Latest topics

» Expolanka to continue its winning streak
by samaritan Today at 10:22 am

» POSITIVES & TARGETS BY IMTIAZ BUHARDEEN
by Gowri123 Yesterday at 4:38 pm

» When will supply chain disruptions ease?
by Gowri123 Yesterday at 4:08 pm

» We’re seeing a shift toward international and value stocks, says Schwab’s Kleintop
by target1 Yesterday at 2:40 am

» Wall Street stumbles as consumer pessimism stokes growth fears
by target1 Yesterday at 2:34 am

» Free Market Capitalism vs. Crony Capitalism
by target1 Yesterday at 2:30 am

» Sri Lankan corporations reap large profits as workers and rural toilers face poverty and starvation
by CHRONICLE™ Tue Jun 28, 2022 6:37 pm

» අද රාත්‍රියෙන් පසු, යක්ෂයාගේ හෝරාව ඇරඹේ!
by God Father Tue Jun 28, 2022 6:13 pm

» Derana 360 with Minister Dhammika Perera
by samaritan Tue Jun 28, 2022 1:07 pm

» CENTRAL INDUSTRIES PLC (CIND.N0000)
by LHW Tue Jun 28, 2022 9:24 am

» Breaking News- Kanchana to go to Qatar ; 2 more ministers off to Russia
by Beyondsenses Tue Jun 28, 2022 8:13 am

» PM thanks President Biden for assuring US support to Sri Lanka
by Beyondsenses Tue Jun 28, 2022 8:07 am

» Sri Lanka Stock Market heading toward ASPI 4500
by God Father Mon Jun 27, 2022 9:14 pm

» Why no power cuts in certain areas of Colombo?
by God Father Mon Jun 27, 2022 8:03 pm

» කොළඹ රාජකීය ගොල්ෆ් සමාජය විසින් රජයේ දේපළ අවභාවිත කිරීම
by ddindika Mon Jun 27, 2022 9:33 am

» LOLC to enter the giant Indian Market
by samaritan Mon Jun 27, 2022 9:17 am

» LOLC HOLDINGS PLC (LOLC.N0000)
by CHRONICLE™ Mon Jun 27, 2022 6:46 am

» SOEs within Minimum Programme for Economic Recovery
by CHRONICLE™ Mon Jun 27, 2022 6:44 am

» COVID WAVES: Can there be another Covid-19 wave in Sri Lanka?
by CHRONICLE™ Mon Jun 27, 2022 6:36 am

» Luminex Limited lists on the Diri Savi Board after a capital raise of Rs. 250 Million
by CHRONICLE™ Mon Jun 27, 2022 6:34 am

EXPERT CHRONICLE™

MARKET CHAT


CHRONICLE™ ANALYTICS


ECONOMIC CHRONICLE

GROSS DOMESTIC PRODUCT (GDP)


CHRONICLE™ YouTube

LATEST TWEETS

You are not connected. Please login or register

FINANCIAL CHRONICLE™ » CORPORATE CHRONICLE™ » Shrinkflation: Is it ethical?

Shrinkflation: Is it ethical?

2 posters

Go down  Message [Page 1 of 1]

1Shrinkflation: Is it ethical? Empty Shrinkflation: Is it ethical? Mon Jun 20, 2022 9:04 am

ChooBoy


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics

Shrinkflation: Is it ethical? Shrinkflation

Sri Lanka is facing its worst ever economic crisis, which has affected everyone. Essential commodities such as fuel and pharmaceuticals are in short supply. Inflation is rising sharply and there are speculations by the economists that it could reach a hyperinflationary level if the money printing by the government is continued in the way it is done at present. The cost-push inflationary situation is further aggravated by the rising fuel prices in the global market. In contrast, the organic fertiliser drama, which was an utter failure, has led to a massive food shortage, and let us hope it would not end up in a famine.

Prices of all consumer products are continuously on the rise owing to an increase in the costs of raw materials, energy, labour, and transportation. When consumers find it hard to purchase their essentials with the fixed amount of money they have what would be the consequences? They will prioritise their requirements and some items will drop out from their list depending on individual decisions and choices. If the prices go up further the consumers will not only refrain from buying some items but also reduce the quantity they regularly buy. In such a situation what are the options producers have to sell their products? There will be lesser chances for them to follow popular promotional strategies like volume discounts, bundle pricing, etc.

Though not new, a recent trend to market the products has been to resize the packaged product downward, which is known as “shrinkflation”, a term said to be coined by the British economist Pippa Malmgren in 2009. Literally, it is selling the smaller package at the same price as according to behavioral economics more people are sensitive to price rather than package weight or volume.

A few decades ago, laundry soaps came as bars and many consumers were unable to buy a whole bar. During those times, merchants, used to cut the soap into small pieces using a thread and sold them at prices proportional to the volume. In terms of the product quantity, shrinkflation follows a similar principle and one advantage is that you can afford to buy a well-rapped final product avoiding any embarrassment. Nowadays, many products like soap, toothpaste, milk powder, etc. are following the shrinkflation strategy. However, it is a tough task for the consumer to track the change in the quantity of the product.

Is there anything wrong or fraudulent in this marketing strategy if product price and package weight or volume are clearly shown? In this respect, it would not be illegal. Still, one would say that this is a deceptive strategy as only a literate smart shopper can make the right decision whether to buy it or not as it needs some arithmetic calculations to find the price per unit weight or volume. However, it is very unfair if we expect the consumers to spend time in this scrutinizing process considering their fast-paced lifestyles. Hence, the question is whether business ethics crash in when a marketer follows the “shrinkflation” strategy.

On the contrary, package up-sizing is another promotional strategy followed by many marketers which is the opposite of shrinkflation. In this case, marketers offer more quantity for the same price. However, the notable difference here is that many marketers inform the consumers about this quantity increase either by advertising or highlighting it on the package itself. In contrast, shrinkflation may sound like cheating to many consumers as marketers engage in this practice in silence where they conceal the fact that they charge the same price or more for less product quantity. Probably the consumers are frustrated and would switch to substitute products of competitors or unpackaged generic products at the expense of brand loyalty.

Inflation estimates of the country are based on the consumer price index which is based on the increase in the cost of a basket of retail goods and services for a particular period. If items considered in the basket do not have specified weights and volumes shrinkflation affects the inflation statistics as the estimated inflation figure is less than the actual inflation.

On the positive side, as only the products’ size is reduced but not the price, the customers would find the product to be affordable. Most importantly shrinkflation strategy will help companies to maintain their profitability. In conclusion, companies are not bound to offer their products in the same quantity and it is the consumers’ decision whether to buy them or not. However, we have to take the question of whether the marketers have to be more open with consumers during the shrinkflation process in light of business ethics.

https://island.lk/shrinkflation-is-it-ethical/

sheildskye likes this post

2Shrinkflation: Is it ethical? Empty Re: Shrinkflation: Is it ethical? Mon Jun 20, 2022 10:11 am

sheildskye

sheildskye
Manager - Equity Analytics
Manager - Equity Analytics

Economics of Keynes only works for exporting countries. China can afford to follow money supply model, but India and Sri Lanka are too small. The Europeans and the American are too greedy.

CHRONICLE™ likes this post

3Shrinkflation: Is it ethical? Empty Re: Shrinkflation: Is it ethical? Tue Jun 21, 2022 2:05 pm

sheildskye

sheildskye
Manager - Equity Analytics
Manager - Equity Analytics

Important article, People who missed it- good read...

Back to top  Message [Page 1 of 1]

Permissions in this forum:
You cannot reply to topics in this forum